What’s the quick response to how much you should repay on your debt? Simply, stroke off as much as your budget permits.
However, this elicits a deeper explanation because it’s not as straightforward as the immediate reply might suggest. Looking back to the time when my partner and I were wrestling with our $45,000 debt – a mix of student loans, car loans, and credit card dues – the path to debt elimination seemed almost unattainable, like a towering mountain we’d never surmount.
Fast-forward a few years, our experience showed us that eradicating this debt was not a pipe dream. It didn’t happen instantly though.
THE COURSE TO DISCOVERING OUR DEBT PAYOFF AMOUNT
Clearing our debt of $45K was a 45-month affair. Some might deem this to be a sluggish pace, while it might baffle others.
One of our primary obstacles was to discern the exact amount to designate for our debt every month, primarily because our finances were stretched quite thin back then. We had to make do with an income that was less than half of what we now earn, surviving on my partner’s minimum wage and living from paycheck to paycheck.
So how could we manage any spare cash to throw at our debt?
If you find yourself wondering how to pay off your debts when you already feel squeezed and are living frugally, there might be some available debt relief options based on your needs. Here are few strategies that worked wonders for us.
Wondering how much to allocate towards your debt? It’s as much as you’re able to spare.
RETHINK YOUR EXPENSES
Often people embark on their journey to repay their debt under the assumption that they don’t have any additional money to spare for this purpose. However, it’s highly plausible that they’ve not been accurately tracking their spending; and by that, I mean every single dime.
To get a clear picture of where your money goes, begin by monitoring all your expenses for a month. You might realize that certain small, unnoticed expenditures are cumulatively making a significant dent in your income. By identifying and cutting down on these unnecessary expenses, you can free up funds for your debt.
Is it a weekly Starbucks run? Lunch outings with buddies? Grabbing dinner on your way back home? Unwarranted grocery purchases? These unnecessary expenses could be re-channeled towards your debt.
MAKE CONCESSIONS
Another sure-fire way to squeeze out more funds for paying off your debt is by making financial compromises.
For instance, can you live without your pricey gym membership? What about saving on your massive internet bills? Can you cancel your cable subscription?
These little luxury costs amass over time and are burdens you shouldn’t bear until you are debt-free.
GIVE AS MUCH AS POSSIBLE
In response to “How much should I allocate for debt payment each month?”, the answer remains “Whatever amount you can manage”.
But as outlined, the answer isn’t this plain and simple. Many people tend to believe they can’t afford to allot any more money towards settling their debt, but that’s because they are not ready to make the key life changes and sacrifices required for a debt-free lifestyle. Are you?
How much do you set aside to repay your debt each month – the bare minimum or extra? How did you decide on that figure?
